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As the UK bank holiday long weekend left European markets fairly quiet today, some serious volatility hit crude oil trading once US markets opened later in the day.

Down about $1.50 most of the day Monday from Friday’s close of $45.22 per barrel, US WTI Crude prices started soaring in the US mid morning, rising about $5 or about 8% to trade at above $49, up to $49.20 as of the time of writing.

The reversal in oil prices – which had been stuck in a summer-long dive the past few weeks – brought crude prices back to the point where they are even with the beginning of August.

In a longer term view, however, oil prices are well down their recent highs. WTI Crude prices were in the mid $50’s per barrel at the beginning of 2015, and at this time in 2014 were in the low $90s.

The reason for the sudden jump in oil prices?

Early in the US trading session new data showed that US oil production data was down from expectations. And perhaps more importantly, statements emanating from OPEC that it was ‘concerned’ by the recent oil price drop and that it would talk with other oil producers about solving the current low price environment sent speculators into an oil-buying tizzy.

In recent months the specter of excess supply has weighed on the price of oil as OPEC countries led by Saudi Arabia have kept production high to maintain market share, even as prices continued to plummet. Many analysts believe that Saudi Arabia has been trying to flood the market to keep prices low in an attempt to punish Iran, feeling that it can weather a low-price storm a lot better than the ambitious Iranian regime, which has become very dependent on oil revenues.

Another country hard-hit by lower oil prices has been Russia, which along with the US and Saudi Arabia are the Big-3 oil producers. Russia has continued to pump more oil even as prices has fallen, trying to make up the revenue shortfall from lower prices.

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